Consider the Following Projects, X and Y Where the Firm

question 124

Multiple Choice

Consider the following projects, X and Y where the firm can only choose one. Project X costs $600 and has cash flows of $400 in each of the next 2 years. Project Y also costs $600, and generates cash flows of $500 and $275 for the next 2 years, respectively. Which investment should the firm choose if the cost of capital is 25 percent?

• A) Project X, since it has a higher NPV than Project Y
• B) Project Y, since it has a higher NPV than Project X
• C) neither, since both the projects have negative NPV
• D) neither, since both the projects have positive NPV

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Definitions:

Workplace

The location or environment where individuals are employed to perform tasks and duties related to their jobs.

Defense Mechanism

Psychological strategies brought into play by individuals, unconsciously, to cope with reality and maintain self-image.

Compensation

Refers to the total cash and non-cash payments that employees receive in exchange for their work, including salaries, bonuses, benefits, and incentives.

Semicircular Canals

Structures in the inner ear that are part of the vestibular system, helping to regulate balance and spatial orientation.